In this week’s severe fluctuations in the East 8 Time Zone, the cryptocurrency contract market triggered approximately $1.861 billion in liquidations across the network within 24 hours, with leveraged risks being concentrated and cleared in a very short time. More notably, about $1.752 billion was from long positions, while short positions accounted for only about $110 million, indicating a significant imbalance between longs and shorts that far exceeds the usual volatility range. This has been described by multiple data providers and traders as the “most severe single-day leverage washout since 2026.” The market generally views this round of liquidations as a concentrated realization of the extreme leverage accumulation and liquidity fragility that had built up previously, with price fluctuations themselves merely serving as the trigger. The real revaluation is the entire market's perception of risk and its tolerance for high-leverage optimism.
Extreme Unilateral Data Revealed by Liquidations
● Funding Composition: Within this 24-hour period, the total liquidation scale across the network was approximately $1.861 billion, of which $1.752 billion was from long positions, accounting for about 94%, while short positions were approximately $110 million, which can almost be ignored in the overall liquidation volume. This structural figure directly outlines the extreme unilateral market positioning.
● Sentiment Profile: Some market analyses indicate that “the 94% share of long liquidations shows excessive optimism in the market.” Such a high proportion means that for a considerable period prior, funds were highly consistent in directional choices, with traders generally betting on a unilateral price increase, willing to continuously increase their positions under high leverage while ignoring potential retracement space.
● Short Characteristics: In contrast, the liquidation scale of about $110 million from short positions is significantly smaller, reflecting that short-selling funds were overall more cautious in this round of market activity, with limited participation and likely maintaining a relatively conservative approach in leverage usage, participating with lower leverage or hedging strategies rather than aggressively betting on a unilateral trend.
● Historical Comparison: Reviewing typical liquidation days, daily liquidations exceeding a billion are not uncommon, but the direction of liquidations often tends to be more balanced or at least exhibits a relatively symmetrical two-way washout between longs and shorts. The pattern of over 90% long liquidations and limited short losses in this instance is also extremely rare in the samples of significant market shocks over the past few years. This abnormal structural imbalance amplifies the perception of “leverage optimism collapsing in a single day” and increases the psychological impact of this event on the market.
Leverage Squeezed Behind the Same Door
Before this round of market activity, the market had formed a highly crowded leverage structure for long positions amid continuous price increases and self-reinforcing sentiment, with more and more new margin being used to support high-leverage exposure in the same direction. When prices began to move unfavorably for longs, these high-leverage positions concentrated in similar price ranges would trigger a series of passive liquidations as margin utilization rates rapidly increased. Initially, a small number of forced liquidation orders would break through local liquidity, causing prices to drop further, leading to more long positions' maintenance margins being breached, extending the chain of automatic liquidations, and the market quickly evolved from a “normal correction” to a “chain reaction.”
From the structural perspective, “excessive optimism” is not an abstract sentiment but is concretely reflected in indicators such as long-short skew and capital utilization rates. During the previous upward phase, the long positions and margin utilization rates continued to rise, while the net short exposure was relatively pressured, meaning that once a correction occurred, losses would be extremely concentrated on one side. Funds repeatedly leveraged in one direction compressed the buffer zone for tolerable fluctuations, and once the strong liquidation price range was breached by the market, automatic reductions and follow-up liquidations would immediately compound, pushing prices further down to seek new liquidity levels. This chain reaction is less of a “black swan” and more a self-correction of the market against prior leverage accumulation and optimistic expectations, an inevitable adjustment based on existing structural foundations rather than stemming from an isolated event's unexpected impact.
The Amplifying Effect of Thin Liquidity and Forced Liquidation Rules
During such severe volatility moments, the surge in instantaneous sell orders is superficial; the deeper amplifier is the lack of order book depth. When a large number of longs are pushed into forced liquidation sell orders by the system in a short time, if buy orders near key price levels are not abundant, the matching system can only execute trades down the order book step by step, significantly accelerating the price drop. Selling pressure that could have been digested at a more moderate pace, due to insufficient depth, is concentrated and slammed into lower price levels in a very short time, creating a chain reaction of “prices first killing liquidity, then killing sentiment.”
From the perspective of the forced liquidation matching mechanism, the impact of limit price liquidations and market price liquidations on liquidity is not the same. In an environment with reasonable liquidity, limit price liquidations help keep passive liquidations within a relatively reasonable price range, avoiding unnecessary secondary impacts on the market through price constraints; however, in scenarios of amplified volatility and thin orders, market price liquidations directly target “taking all remaining buy orders in the market,” spreading the selling pressure originally confined to a local range to deeper prices, and once the threshold is triggered, the inertia is very strong.
Research institutions tracking this event show that mainstream exchanges did not report system anomalies, indicating that the primary cause of the uncontrolled price drop lies in the market structure itself, rather than technical failures of the matching engine or risk control modules. Further observation from a cross-platform perspective reveals that similar models based on margin ratios and risk limits operate in parallel across multiple platforms. When prices touch key ranges, the forced liquidation thresholds of various platforms are almost simultaneously activated, leading to synchronized passive selling across multiple markets, transforming fluctuations that could have been absorbed by the liquidity of a single platform into a systemic shock of “network-wide resonance.”
Relative to Historical Peaks, This “Extreme” is Structural Rather Than Quantitative
In discussing this round of events, some research will compare it to the December 2025 single-day liquidation peak, but the specific data related to this has currently been marked as pending verification, including the precise liquidation scale and exchange distribution on that day, which have not yet been fully confirmed. From publicly available information, the liquidation scale of $1.861 billion in this round is not the highest in absolute terms and may even be lower than some previous peak days. However, what truly shocks traders is not the total amount itself, but the extreme degree of differentiation between longs and shorts and the structural characteristics of concentrated losses among longs.
For this reason, even though the scale may not necessarily set a record, the market is still willing to define it as the “most severe single-day leverage washout since 2026.” This “severity” points more towards psychological and structural aspects: on one hand, the highly consistent long positions were systematically stripped away in a short time, with many high-leverage positions that had previously escaped retracements having nowhere to hide in this round; on the other hand, this one-sided liquidation pattern will form a deeper re-education of risk preferences in the market. For readers, when referencing expressions like “historical peaks,” it is essential to pay special attention to the data sources and their verification status, especially regarding specific values and platform distributions of past peaks, as details that have not undergone complete cross-verification should not be used as serious comparative bases.
After Liquidations, How Will Leverage Risks Return?
From historical experience, large-scale liquidation events like this often significantly lower the overall market leverage ratio in the short term: some accounts' margins evaporate passively, and the surviving funds will naturally shift to a defensive posture psychologically, using lower leverage or simply returning to holding spot positions. High-frequency traders and institutions often reassess their margin usage limits after such events, tightening risk control parameters for a period, causing the total leverage volume to enter a “cooling period.”
During this process, key indicators such as perpetual contract funding rates and long-short position ratios typically experience a repair path from extreme to neutral. Previously high positive funding rates leaning towards longs may quickly drop or even briefly turn negative after liquidations, reflecting a reconstruction of the balance of long and short forces; the long-short position ratio may also have the opportunity to recover from unilateral bias to a range closer to 1:1, indicating that the driving force for the next round of market activity will come more from spot buying and incremental funds rather than purely from leverage pushing prices up.
From a medium to long-term perspective, this phase of “excessive optimism being concentrated and corrected” may not be purely bearish for subsequent market activity; rather, it could create space for healthier upward movements after deleveraging. If prices complete the liquidation of leverage within a relatively limited time, subsequent upward movements will no longer bear the heavy passive liquidation pressure, making it less likely to trigger systemic sell-offs during retracements. Of course, the market will not automatically move towards stability; investors still need to be vigilant about the quiet accumulation of a new round of unilateral crowding: when funding rates rise again, the long-short position ratio clearly leans towards one side, and market narratives begin to overlook risks, it often indicates that leverage risks are developing again from a low position. Whether one can proactively reduce leverage and control positions before these signals gather again will determine whether they are part of the reshuffled group or capable of absorbing chips during the next severe liquidation.
Join our community to discuss and grow stronger together!
Official Telegram community: https://t.me/aicoincn
AiCoin Chinese Twitter: https://x.com/AiCoinzh
OKX Benefits Group: https://aicoin.com/link/chat?cid=l61eM4owQ
Binance Benefits Group: https://aicoin.com/link/chat?cid=ynr7d1P6Z
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
